a16z
What the people behind Andreessen Horowitz (a16z) actually wrote about markets, product/market fit, running a company through bad times, and network effects, with the year and source for each idea and where it applies in the idea-to-MVP playbook. Compare with Y Combinator, which starts from users rather than markets, and Peter Thiel on monopoly.
Who they are and why listen
| Who | Background | Why listen | Main sources |
|---|---|---|---|
| Marc Andreessen | co-created the Mosaic browser, co-founded Netscape, Loudcloud/Opsware and a16z (2009) | a founder who went through the 1990s boom and bust, then a VC | The Pmarca Guide to Startups (2007 blog), essays |
| Ben Horowitz | Netscape product manager, then co-founder and CEO of Loudcloud/Opsware (sold to HP in 2007), a16z co-founder | the most candid writer on what being a CEO in trouble feels like | The Hard Thing About Hard Things (2014), What You Do Is Who You Are (2019), a16z blog |
| Chris Dixon | founder (Hunch, SiteAdvisor), a16z general partner | short, sharp essays on how new technologies start | cdixon.org |
| Andrew Chen | growth writer, Uber growth executive, a16z general partner | the network-effects playbook | The Cold Start Problem (2021), andrewchen.com |
| Benedict Evans | former a16z partner, now independent analyst | big-picture tech strategy | ben-evans.com newsletter and presentations |
Where YC's advice is "talk to users", a16z's center of gravity is the market: pick a market that pulls the product out of you, then fight to reach product/market fit.
Product/market fit: the only thing that matters
Andreessen's Part 4: The only thing that matters (opens in a new tab) (June 2007) is the essay that popularised the term product/market fit (PMF).
He splits a startup into team, product and market, and says most entrepreneurs and VCs name team, most engineers name product, and he takes the third position: market matters most. His reasoning, paraphrased:
- In a great market, "the market pulls product out of the startup": the product just has to basically work, and the team can be upgraded on the fly.
- In a terrible market, the best product and team still fail.
- Great products can create huge new markets (his example is VMware), but he wouldn't count on it.
He credits Andy Rachleff (Benchmark) for the formulation, which he calls Rachleff's Law of Startup Success:
"The #1 company-killer is lack of market."
| Rachleff's law | Outcome |
|---|---|
| great team + lousy market | market wins |
| lousy team + great market | market wins |
| great team + great market | "something special happens" |
And Rachleff's Corollary: "The only thing that matters is getting to product/market fit." His definition: "Product/market fit means being in a good market with a product that can satisfy that market."
| When PMF isn't happening | When PMF is happening |
|---|---|
| customers aren't quite getting value | customers buy as fast as you can make it |
| word of mouth isn't spreading | usage grows as fast as you can add servers |
| usage isn't growing that fast | money piles up in the bank account |
| press reviews are "blah" | you hire sales and support as fast as you can |
| sales cycles take too long; deals don't close | reporters call you |
Before PMF (BPMF) do whatever it takes to get there: change people, rewrite the product, change market, say yes or no to customers against your instincts, raise that dilutive round. After PMF, everything else starts to matter. He adds that founders of successful startups usually credit things that had nothing to do with it: "People are terrible at understanding causation."
More from the Pmarca guide
The Pmarca Guide to Startups (opens in a new tab) was a 2007 blog series, now archived at pmarchive.com.
| Principle | What it means | Source | Apply it by… |
|---|---|---|---|
| The onion theory of risk | investors see a startup's risk as layers; your job is to peel them off one by one until investing looks merely risky, not terrifying | Part 2: When the VCs say "no" (opens in a new tab) (2007) | listing your risks and naming the one the next six weeks removes |
| Kill market risk with customers | detailed research sometimes helps, but usually you need actual (preferably paying) customers | same | smoke tests and pre-sales |
| Kill product risk by building | for technology and product risk the only answer is to build it, at least to beta | same | an MVP that tests the riskiest assumption |
| Big companies are Moby Dick | you are Captain Ahab: you can't predict or explain what a big company will do, so don't build your plan around one | Part 5 (opens in a new tab) (2007) | not depending on a partnership or acquirer |
| How much to raise | before PMF, raise at least enough to reach PMF; after PMF, enough to fully exploit the opportunity and reach profitability | Part 6 (opens in a new tab) (2007) | sizing a round to a milestone, not a vanity number |
| The plan doesn't matter much | you won't know if the idea works; expect to change every part of the plan | Part 7 (2007) | treating the canvas as a hypothesis |
The onion's layers in Part 2:
| Risk | Question | How to peel it |
|---|---|---|
| founder | is this the right team? | add or swap founders |
| market | will anyone want it and pay? | real customers |
| competition | are others doing it? | a differentiated angle |
| timing | too early or too late? | evidence the market is ready now |
| financing | can it raise the later rounds it needs? | a plan that needs less capital |
| marketing | can it cut through the noise? | a channel that works |
| distribution | can it reach the customer? | a partner or direct channel |
| technology | can it be built at all? | build it |
| product | can this team build it? | build it |
| hiring | can it hire who it needs? | name the people |
| location | is it where it can hire and sell? | move, or show why it doesn't matter |
Big theses: software, building, optimism
These are worldview essays, not tactics, but they explain what a16z funds.
| Essay | Year | Core claim | For a founder it means… |
|---|---|---|---|
| Why Software Is Eating the World (opens in a new tab) | 2011 (Wall Street Journal) | "Software is eating the world": ever more industries are run on software, and software companies will disrupt incumbents | look for old industries where software now works at scale; the "why now?" test |
| It's Time to Build (opens in a new tab) | 2020 | written early in COVID-19: the West lacked masks, tests and housing because "We chose not to build"; the problem is desire, inertia, regulatory capture and will | ambitious "atoms" problems are fundable |
| The Techno-Optimist Manifesto (opens in a new tab) | 2023 | a statement of beliefs (e.g. growth is progress; technology is a lever on the world) | context for a16z's positions; it drew wide praise and criticism |
Ben Horowitz: the hard things
The Hard Thing About Hard Things (Harper Business, 2014) grew out of Horowitz's a16z blog posts, cited here where the text is online.
The Struggle (2012)
The Struggle (opens in a new tab) describes the stretch when nothing works, in a run of "The Struggle is…" lines ("when food loses its taste", "when you are surrounded by people and you are all alone"). His points: every great entrepreneur has been through it; it is not failure, but it causes failure if you're weak; and "The Struggle is where greatness comes from."
Nobody Cares (2011 (opens in a new tab)): after an injury crisis, the football coach Bill Parcells was told by Al Davis, "Bill, nobody cares, just coach your team." Horowitz's reading: spend no energy on what you could have done and all of it on the way out.
Peacetime CEO / Wartime CEO (2011)
Peacetime CEO/Wartime CEO (opens in a new tab): peacetime is when the company has a large advantage in a growing market; wartime is when it faces "an imminent existential threat". He says he was a peacetime CEO for about nine months and a wartime CEO for the next seven years, and that most management books describe peacetime techniques only.
| Peacetime CEO | Wartime CEO |
|---|---|
| knows that proper protocol leads to winning | violates protocol in order to win |
| focuses on the big picture; empowers people to make detailed decisions | cares about any detail that interferes with the prime directive |
| spends time defining the culture | lets the war define the culture |
| works to minimize conflict | heightens the contradictions |
| strives for broad-based buy-in | neither indulges consensus-building nor tolerates disagreements |
| aims to expand the market | aims to win the market |
(Rows lightly condensed from his list of about 20.) An MVP-stage startup is almost always in wartime, which is why founder-mode behavior feels natural early on (see PG's Founder Mode).
Other Horowitz rules
| Principle | What it means | Source | Apply it by… |
|---|---|---|---|
| Lead bullets | when you're losing because the product is worse, no clever strategy saves you; an engineer told him "There is no silver bullet that's going to fix that. No, we are going to have to use a lot of lead bullets." | Lead Bullets (opens in a new tab) (2011) | fixing the product before pivoting when customers are buying, just not from you |
| People, products, profits, in that order | a chapter title and rule of the book: look after people first, because products and profits follow | The Hard Thing (2014) | early culture and hiring |
| A good PM is the CEO of the product | an old Netscape-era training memo contrasting good and bad product managers (e.g. good ones define the "what", bad ones obsess over the "how"; good ones take written positions) | Good Product Manager/Bad Product Manager (opens in a new tab) (reposted 2012; it says it was written about 15 years earlier) | writing crisp specs for the MVP |
| Culture is what you do | culture is how a company makes decisions: the assumptions people use for everyday choices, set by behavior, not value statements; ignore something off-culture and you've created a new culture | What You Do Is Who You Are (opens in a new tab) (2019; publisher summary) | deciding early which behaviors you will enforce, then enforcing them |
Chris Dixon: toys, tools and mazes
| Idea | What it means | Source | Apply it by… |
|---|---|---|---|
| The next big thing starts out looking like a toy | building on Christensen: disruptive products undershoot user needs at first, so incumbents dismiss them; judge them as processes riding external improvement curves (cheaper chips, more bandwidth), not as static products | The next big thing will start out looking like a toy (opens in a new tab) (2010, written before he joined a16z) | asking what curve will make your "toy" good enough, and when |
| Most toys stay toys | Dixon says so himself; sustaining products can still be good businesses | same | not using "it looks like a toy" as evidence |
| Come for the tool, stay for the network | attract users with a single-player tool, then get them into a network (Delicious, Instagram) | Come for the tool, stay for the network (opens in a new tab) (2015) | networked products that are useful with one user |
| The idea maze | Balaji Srinivasan's term: a good idea is a multi-year map of which turns lead to treasure and which to death; build it from history, analogy, theory and direct experience | The idea maze (opens in a new tab) (2013) | a history of prior attempts in competition analysis |
| Stealth mode is a bad idea | learning the maze from practitioners outweighs the risk of your idea being stolen | same | talking about your idea openly |
Andrew Chen: networks and channels
The Cold Start Problem (2021)
Chen's book (book site (opens in a new tab)) is organized as five stages, each a part of the book:
| Stage | Problem | Key ideas (chapter topics) | Apply it by… |
|---|---|---|---|
| 1. The cold start problem | a network with too few users is useless, so users leave (anti-network effects) | the atomic network (the smallest network that is stable and can grow by itself); the hard side (the minority who do most of the work: hosts, drivers, creators); a killer product; magic moments | designing the MVP around one atomic network |
| 2. Tipping point | replicating atomic networks until the market tips | invite-only launches; "come for the tool"; paying up for launch; "flintstoning" (humans doing the work software will do later); hustle | first users in launch |
| 3. Escape velocity | making growth self-sustaining | the trio of forces: engagement, acquisition and economic effects | growth loops |
| 4. The ceiling | growth stalls | saturation, the law of shitty clickthroughs, the network revolting, "eternal September", overcrowding | watching cohort quality as you grow |
| 5. The moat | defending against other networks | virtuous and vicious cycles; cherry-picking; big-bang launch failures; competing over the hard side; bundling | long term, after PMF |
"Flintstoning" is Chen's version of PG's "be the software" in Do Things That Don't Scale (opens in a new tab).
The Law of Shitty Clickthroughs (2012)
The Law of Shitty Clickthroughs (opens in a new tab) (written before he joined a16z):
"Over time, all marketing strategies result in shitty clickthrough rates."
His example: the first banner ad (HotWired, 1994) had a 78% clickthrough rate; Facebook banner ads in 2011 averaged 0.05%. Causes: novelty wears off, competitors copy what works, and early adopters respond better than the mainstream. The practical rule is that a channel that works today is decaying; keep testing new ones and budget for falling performance. Use it in channels.
Benedict Evans, briefly
Evans (a16z partner until 2019, now independent) writes analysis rather than founder advice: what platform shifts mean, which markets are big, why incumbents miss changes. For an early founder his use is market context for the "why now?" question. See his essays and presentations (opens in a new tab).
Where each piece applies
| Pipeline phase | a16z idea | Where |
|---|---|---|
| Ideation | market first; software eating an industry; the idea maze; toy vs process | ideation |
| Validation | peel market risk with real customers; onion of risks | validation |
| Product design | atomic network; hard side; come for the tool | product design |
| Building | lead bullets: fix the product before hunting for tricks | building the MVP |
| Launch & iterate | PMF signs; decaying channels; tipping point | launch & iterate |
| Whole journey | the Struggle; wartime operating; nobody cares | playbook |
Critiques and limits
- Hindsight on PMF. "You can always feel it" is only obvious afterward. In the middle, founders see mixed signals: use measurable proxies (retention cohorts, the Sean Ellis test, organic referrals) from the PMF section, not a feeling.
- Market-first vs founder-first. Andreessen says market beats team; YC and many VCs say they bet on founders. Both are partly true: a great team can find a better market (pivots), but no team can fix a market that doesn't exist.
- Survivorship. "Looks like a toy" and "wartime CEO" stories are told about winners. Many toys stayed toys; many wartime CEOs lost the war.
- Wartime as an excuse. Horowitz's wartime list (profanity, intolerance of disagreement) can be used to justify bad management in companies that aren't at war. The honest test is whether there really is an existential threat.
- Network effects are rare. Altman notes few businesses have true network effects (How to Be Successful (opens in a new tab), 2019). Don't force a network into a tool that doesn't need one.
- Politics and positioning. a16z publishes openly political manifestos and lobbies on policy (e.g. crypto and AI). That's context for why some readers discount the firm; judge each argument on its evidence.
- Era. The Pmarca guide is from 2007, before cloud computing made building cheap; "raise enough to reach PMF" now often means less money than it did then.
Takeaways checklist
MARKET
[ ] Is the market big and growing? Evidence, not hope
[ ] Would the market pull a basic working product out of
us? Who is already trying to buy something like it?
[ ] Why now: what curve (cost, speed, adoption) makes
this possible or soon possible?
[ ] Idea maze drawn: who tried before, why they died
RISK
[ ] Top 3 onion layers listed; next milestone peels one
[ ] Market risk tested with real (ideally paying) users
PMF
[ ] Before PMF: everything else is secondary
[ ] PMF judged on retention and pull, not feelings
[ ] Round sized to reach PMF, not a round number
NETWORKS (if any)
[ ] Atomic network defined; hard side identified
[ ] Useful with a single user (tool before network)?
[ ] Channel decay expected; new channels in test
OPERATING
[ ] Losing on product? Lead bullets, not a pivot
[ ] Wartime or peacetime? Honest answer
[ ] Culture rules decided by actions, not a posterReferences
- Marc Andreessen, The Pmarca Guide to Startups (2007), archived at pmarchive.com (opens in a new tab): the full series
- Marc Andreessen, Part 4: The only thing that matters (2007) (opens in a new tab): product/market fit, Rachleff's law
- Marc Andreessen, Part 2: When the VCs say "no" (2007) (opens in a new tab): the onion theory of risk
- Marc Andreessen, Part 5: The Moby Dick theory of big companies (2007) (opens in a new tab): why you can't predict big companies
- Marc Andreessen, Part 6: How much funding is too little? Too much? (2007) (opens in a new tab): raising to reach PMF
- Marc Andreessen, Why Software Is Eating the World (2011) (opens in a new tab): the WSJ essay, reposted on a16z.com
- Marc Andreessen, It's Time to Build (2020) (opens in a new tab): the COVID-era call to build
- Marc Andreessen, The Techno-Optimist Manifesto (2023) (opens in a new tab): statement of beliefs
- Ben Horowitz, Peacetime CEO/Wartime CEO (2011) (opens in a new tab): two management modes
- Ben Horowitz, Nobody Cares (2011) (opens in a new tab): the Parcells story
- Ben Horowitz, Lead Bullets (2011) (opens in a new tab): no silver bullets when the product is worse
- Ben Horowitz, The Struggle (2012) (opens in a new tab): the emotional low point of company-building
- Ben Horowitz, Good Product Manager/Bad Product Manager (repost, 2012) (opens in a new tab): 1990s PM training memo
- Ben Horowitz, The Hard Thing About Hard Things (Harper Business, 2014): the book collecting and extending the posts
- Ben Horowitz, What You Do Is Who You Are (2019) (opens in a new tab): culture as behavior
- Chris Dixon, The next big thing will start out looking like a toy (2010) (opens in a new tab): disruption and toys
- Chris Dixon, The idea maze (2013) (opens in a new tab): Balaji Srinivasan's concept
- Chris Dixon, Come for the tool, stay for the network (2015) (opens in a new tab): bootstrapping networks
- Andrew Chen, The Law of Shitty Clickthroughs (2012) (opens in a new tab): channel decay
- Andrew Chen, The Cold Start Problem (Harper Business, 2021) (opens in a new tab): network-effects stages; contents on the book site
- a16z, The Cold Start Problem book page (opens in a new tab): publisher summary
- Benedict Evans (opens in a new tab): essays and annual presentations